4-4-5 Calendar
Encyclopedia
The 4–4–5 calendar is a method of managing accounting periods. It is a common calendar structure for some industries, such as retail
, manufacturing
and parking
industry.
The 4–4–5 calendar divides a year into 4 quarters. Each quarter has 13 weeks which are grouped into two 4-week "months" and one 5-week "month". The grouping of 13 weeks may be set up as 5–4–4 weeks or 4–5–4 weeks, but the 4–4–5 seems to be the most common arrangement.
When a 4–4–5 calendar is in use, reports with month-by-month comparisons or trend
over periods do not make sense because one month is 25% larger than the other two. However, you can still compare a period to the same period in the prior year, or use week by week data comparison.
Its major advantages over a regular calendar is that the end date of the period is always the same day of the week, which is useful for shift or manufacturing planning, and that every period is the same length.
One disadvantage of the 4–4–5 calendar is that it has 364 days (7 days * 52 weeks), so approximately every 5 years there will be a 53 week year, which can make year on year comparison difficult.
2006-08-26 2006 August 26
2007-08-25 2007 August 25
2008-08-30 2008 August 30 (leap year)
2009-08-29 2009 August 29
2010-08-28 2010 August 28
2011-08-27 2011 August 27
2012-08-25 2012 August 25 (leap year)
2013-08-31 2013 August 31
The end of the fiscal year would move one day earlier on the calendar each year (two days in leap years) until it would otherwise reach the date seven days before the end of the month (August 24 in this case). At that point it resets to the end of the month (August 31) and the fiscal year has 53 weeks instead of 52. In this example the fiscal years ending in 2008 and 2013 have 53 weeks.
2006-09-02 2006 September 2
2007-09-01 2007 September 1
2008-08-30 2008 August 30 (leap year)
2009-08-29 2009 August 29
2010-08-28 2010 August 28
2011-09-03 2011 September 3
2012-09-01 2012 September 1 (leap year)
2013-08-31 2013 August 31
The end of the fiscal year would move one day earlier on the calendar each year (two days in leap years) until it would otherwise reach the date four days before the end of the month (August 27 in this case). At that point the first Saturday in the following month becomes the date closest to the end of August and it resets to that date and the fiscal year has 53 weeks instead of 52. In this example the fiscal year ending in 2011 has 53 weeks.
The 52–53 week method is permitted by generally accepted accounting principles
in the United States, as well as by the US Internal Revenue Code
(IRS Publication 538).
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
, manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
and parking
Parking
Parking is the act of stopping a vehicle and leaving it unoccupied for more than a brief time. Parking on one or both sides of a road is commonly permitted, though often with restrictions...
industry.
The 4–4–5 calendar divides a year into 4 quarters. Each quarter has 13 weeks which are grouped into two 4-week "months" and one 5-week "month". The grouping of 13 weeks may be set up as 5–4–4 weeks or 4–5–4 weeks, but the 4–4–5 seems to be the most common arrangement.
When a 4–4–5 calendar is in use, reports with month-by-month comparisons or trend
Financial analysis
Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project....
over periods do not make sense because one month is 25% larger than the other two. However, you can still compare a period to the same period in the prior year, or use week by week data comparison.
Its major advantages over a regular calendar is that the end date of the period is always the same day of the week, which is useful for shift or manufacturing planning, and that every period is the same length.
One disadvantage of the 4–4–5 calendar is that it has 364 days (7 days * 52 weeks), so approximately every 5 years there will be a 53 week year, which can make year on year comparison difficult.
52–53-week fiscal year
The 52–53-week fiscal year is a variation on the 4–4–5 calendar. It is used by companies that desire that their fiscal year always end on the same day of the week. Any day of the week may be used, and Saturday and Sunday are common because the business may more easily be closed for counting inventory and other end-of-year accounting activities. There are two methods in use:Last Saturday of the month at fiscal year end
Under this method the company's fiscal year is defined as the final Saturday (or other day selected) in the fiscal year end month. For example, if the fiscal year end month is August, the company's year end could fall on any date from August 25 to August 31. Currently it would end on the following days:2006-08-26 2006 August 26
2007-08-25 2007 August 25
2008-08-30 2008 August 30 (leap year)
2009-08-29 2009 August 29
2010-08-28 2010 August 28
2011-08-27 2011 August 27
2012-08-25 2012 August 25 (leap year)
2013-08-31 2013 August 31
The end of the fiscal year would move one day earlier on the calendar each year (two days in leap years) until it would otherwise reach the date seven days before the end of the month (August 24 in this case). At that point it resets to the end of the month (August 31) and the fiscal year has 53 weeks instead of 52. In this example the fiscal years ending in 2008 and 2013 have 53 weeks.
Saturday nearest the end of month
Under this method the company's fiscal year is defined as the Saturday (or other day selected) that falls closest to the last day of the fiscal year end month. For example, if the fiscal year end month is August, the company's year end could fall on any date from August 28 to September 3. Currently it would end on the following days:2006-09-02 2006 September 2
2007-09-01 2007 September 1
2008-08-30 2008 August 30 (leap year)
2009-08-29 2009 August 29
2010-08-28 2010 August 28
2011-09-03 2011 September 3
2012-09-01 2012 September 1 (leap year)
2013-08-31 2013 August 31
The end of the fiscal year would move one day earlier on the calendar each year (two days in leap years) until it would otherwise reach the date four days before the end of the month (August 27 in this case). At that point the first Saturday in the following month becomes the date closest to the end of August and it resets to that date and the fiscal year has 53 weeks instead of 52. In this example the fiscal year ending in 2011 has 53 weeks.
The 52–53 week method is permitted by generally accepted accounting principles
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards...
in the United States, as well as by the US Internal Revenue Code
Internal Revenue Code
The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...
(IRS Publication 538).